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Stop swapping your donor lists with other nonprofits

June 17, 2015

Greg Warner is CEO and Founder of MarketSmart, a revolutionary marketing software and services firm that helps nonprofits raise more for less. In 2012 Greg coined the phrase “Engagement Fundraising” to encapsulate his breakthrough fundraising formula for achieving extraordinary results. Using their own innovative strategies and technologies, MarketSmart helps fundraisers around the world zero in on the donors most ready to support their organizations and institutions with major and legacy gifts.

One thing (among so many others) that I never understood about nonprofits is why they sell or swap lists with other nonprofits. It’s usually done with low-level donors because nonprofits figure they can afford to lose them.
This strategy could be catastrophic because many low-level donors make great planned giving prospects. And, in fact, many WILL leave their major gift to your organization after their lifetime.
Don’t just take my word for it. In organizations seeking to maximize retention will wish to evaluate the merits of participation in list swop programs. Extant research indicates that lower value donors (who are almost always the focus of such programs) can be just as likely to consider a bequest as other value segments in the database and that once swopped donors will lose around 15% of their subsequent (annual giving) lifetime value. In deciding whether or not to participate in list swops it is therefore not as simple as comparing the immediate return on investment that accrues from the use of this technique as opposed to the use of traditional ‘cold’ lists.”

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8 responses to “Stop swapping your donor lists with other nonprofits”

So SO true, Greg. I’ve even known donors who use a different version of their name… ie putting in middle name or initial… so they can tell WHO sold their name….if they get a new solicitation from a new nonprofit… and they cancel Both of them! whew!!

Ok, this made my jaw drop. I have NEVER worked for a non-profit that sold their donor list (or purchased one). Granted, the largest non-profit I have ever worked for had an operating budget of around 15M, so not working for big big dogs…but still.

The article is, IMHO, both enlightening and misleading. It correctly shines the light on the betrayal of donor trust (both as to Wounded Warrior and the philanthropic sector in general) inherent in selling donor lists.
Unfortunately, the article conflates this bad idea with the very good idea of an organization investing in itself to better accomplish its mission. This can include investing in technology, marketing and even (and especially) leadership. The traditional charity “watchdogs” view “overhead” as intrinsically “bad” because it is diverted from the organization’s services or beneficiaries. Spent correctly “overhead” can enable an organization to serve more and better. The test is whether the investment ultimately advances the mission.
Selling donor lists not only fails to advance the mission for the reasons cited in the article; it *undermines* the mission for the reasons stated in your post. So we can regard it as a bad idea without undermining the concept that smart organizations can and should invest in themselves.
The article hints at how technology is eroding the privacy objection to selling donor lists. It gives short shrift to the defense that the information is “readily available on the internet,” both by placing it in “air quotes” and immediately refuting it by showing that the value of the data is in its segmentation (as opposed to the “raw” information “readily available on the internet”). But isn’t this what data aggregators do? What are all those full page ads in the Chronicle of Philanthropy selling? If I’m on the board of [Your Favorite Charity], why shouldn’t the [children/disabled/homebound/undeserved/etc.] served by [Your Favorite Charity] benefit from the revenue as opposed to some third party data aggregator?
I think the better argument is that *buying* the lists is counterproductive to the extent it diverts attention from both: (1) acquiring new donors who are related to current donors; and (2) stewarding current donors who are likelier to generate more support than “strangers” from a list. Most of what we read on the internet (and on paper) tries to convince us that the grass is always greener on the other side. Your posts remind us that it’s not always true.

I agree and am happy the org I work for doesn’t currently do this.
While you focus on planned/legacy giving vs annual fund & acquisition – I am interested in your thoughts on other cost-effective alternatives for mass donor acquisition? We sometimes buy lists from various magazines and such that we think hit the right demographic, but they can be pretty expensive and don’t necessarily perform well. Acquiring new donors through events, social media followers, and existing donors’ networks may give us a fair amount of dollars but not mass numbers of new donors that we need for long-term success.

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